Close X
Attorney Spotlight

How did Mike DeAgro's experience co-founding a nonprofit advocacy organization lead to a career in the legal field? Find out more>


Close X


Search our Experience

Experience Spotlight

Envision to Sell to KKR for $9.9 Billion

We represented Envision Healthcare Corporation (NYSE: EVHC) in its definitive agreement to sell to KKR in an all-cash transaction for $9.9 billion, including debt. KKR will pay $46 per Envision share in cash to buy the company, marking a 32 percent premium to the company's volume-weighted average share price from November 1, when Envision announced it was considering its options. The transaction is expected to close the fourth quarter of 2018. Read more

Envision Healthcare

Close X

Thought Leadership

Enter your search terms in the relevant box(es) below to search for specific Thought Leadership.
To see a recent listing of Thought Leadership, click the blue Search button below.

Thought Leadership Spotlight

Six Things to Know Before Buying a Physician Practice spotlight

Dermatology, ophthalmology, radiology, urology…the list goes on. Yet, in any physician practice management transaction, there are six key considerations that apply and, if not carefully managed, can derail a transaction. Download the 6 Things to Know Before Buying a Physician Practice to keep your physician practice management transactions on track.

Click here to download the guide.

FCPA Resource Guide Action Items, Issue 6 – Responding to Red Flags and Reports


February 1, 2013

This alert, the sixth and final in our series addressing the Resource Guide to the U.S. Foreign Corrupt Practices Act (available here) that was jointly released by the Department of Justice ("DOJ") and Securities and Exchange Commission ("SEC") on November 14, 2012, provides: (1) a summary of DOJ and SEC's expectations for companies in identifying and responding to red flags; (2) recommended steps before a red flag is raised; and (3) recommended actions in responding to a red flag.

Prior Issues in this Series

Issue 1 – Top DOJ Official Elaborates on New FCPA Resource Guide
Issue 2 – Elements of Compliance Programs
Issue 3 – Relationships with Third Parties
Issue 4 – Gifts, Hospitality and Entertainment
Issue 5 – Mergers, Acquisitions and Joint Ventures

Identifying and Responding to Red Flags

DOJ and SEC emphasize in the Guide that an effective compliance program should include a mechanism for the confidential reporting of suspected or actual misconduct, along with "an efficient, reliable, and properly funded process for investigating the allegation and documenting the company's response" to the allegation. In weighing the adequacy of a company's response to alleged violations, DOJ and SEC "place a high premium" on voluntary disclosure, cooperation and "meaningful" remedial measures.

Guidance based on Enforcement Declinations

Although the Guide does not reveal exactly how much credit a company will receive for its actions in response to a red flag, it does offer a rare glimpse into DOJ and SEC's expectations through the inclusion of six declinations, which customarily are not publicized. DOJ and SEC cite some of the following response steps as reasons for the declinations:

  • Improper payments detected in advance by company's internal controls and investigated by Audit Committee;
  • Undertook thorough internal investigation;
  • Immediately stopped misconduct;
  • Terminated employees involved;
  • Severed ties with third-party agents;
  • Withdrew potentially tainted contract bid;
  • Terminated law firm in foreign locale providing improper advice;
  • Voluntarily disclosed investigation and red flag to DOJ and/or SEC;
  • Substantially updated compliance program (e.g., improved training program); and
  • Developed plan to investigate and remediate subsidiary's red flags post-acquisition, and integrate subsidiary into compliance program (in M&A context).

Before a Red Flag Arises – Action Items

A company should prepare for problems in advance by considering the following action items:

  1. Implement an Effective Compliance Program. In addition to helping to prevent and more quickly detect problems, the existence and strength of a company's pre-existing compliance program will be a key factor in whether DOJ and SEC decide to bring an enforcement action against a company.
  2. Enable Confidential Reporting. Companies should consider establishing a mechanism for two-way confidential reporting through, for example, an ethics line answered by a person, email address or the company’s intranet. 
  3. Develop a Well-Rounded Response Team. A company can avoid many of the pitfalls that often occur during an internal investigation by identifying and readying internal resources that will often be quickly needed when a problem occurs (e.g., legal, compliance, finance, operations and internal audit, as necessary).
  4. Identify Outside Anti-Corruption Counsel and Foreign Local Counsel. By identifying external resource options (and sometimes retaining them) in advance, companies can better compare suitability, cost-effectiveness and fit, rather than rushing to identify, hire and integrate outside counsel in the midst of a crisis.
  5. Establish and Update Incident Response Plan. Developing a response plan in advance will help a company identify, consider and better prepare for contingencies, improve its response time and increase the cost-effectiveness of a response.

Responding to a Red Flag – Action Items

A company assessing how to respond to an alleged violation should consider the following action items:

  1. Evaluate the Big Picture and Scale Response. Companies should develop a risk-based strategy and consider execution practicalities at the outset of their response.
  2. Establish and Protect Legal Privileges. A company should involve in-house counsel as soon as the company becomes aware of a potential problem so that legal privileges can be quickly applied. Failure to do so can result in all aspects of the company's response being subject to disclosure to the government and future civil litigants.
  3. Conduct Internal Investigation. A company should investigate red flags and reports quickly and thoroughly while being mindful of the need to protect the attorney-client privilege, preserve data and document its efforts.
  4. Stop Questionable Activities. Companies should act quickly to identify and halt any questionable business practices. Companies should discipline any culpable employees, replace responsible management and terminate tainted third-party relationships.
  5. Consider Self-Disclosure. In the Guide, DOJ and SEC repeatedly advise companies to self-report misconduct, including FCPA violations. In deciding whether to self-disclose, companies should consider a number of factors including the likelihood of the allegations being revealed through another means (e.g., whistleblower, press, industry-wide sweep, local enforcement action or SEC reporting obligations) and the cross-jurisdictional implications of self-disclosure.
  6. Update Compliance Program. As the Guide notes, "[c]ompanies will want to consider taking 'lessons learned' from any reported violations and the outcome of any resulting investigation to update their internal controls and compliance program and focus future training on such issues, as appropriate."

Summary and Compilation of Resource Guide Alerts

Although this alert is the final installment in the series, a compilation of the six issues will be released in the near future to provide a quick-reference summary of the Resource Guide, along with corresponding practical action items.

Related Services


Visiting, or interacting with, this website does not constitute an attorney-client relationship. Although we are always interested in hearing from visitors to our website, we cannot accept representation on a new matter from either existing clients or new clients until we know that we do not have a conflict of interest that would prevent us from doing so. Therefore, please do not send us any information about any new matter that may involve a potential legal representation until we have confirmed that a conflict of interest does not exist and we have expressly agreed in writing to the representation. Until there is such an agreement, we will not be deemed to have given you any advice, any information you send may not be deemed privileged and confidential, and we may be able to represent adverse parties.